eNPS Score Is the Core of Data-Driven HR

Data drives business. Whether it’s supply chain, sales, or finance, analytic information is increasingly reliable for making the best call on business decisions.

More and more, insights based on data are becoming essential to human resources, particularly when it comes employee retention and engagement.

[bctt tweet=”Firms that used analytics to manage their workforces improved profits by up to 65%” username=”reflektive”]

According to Gallup, about 33 percent of employees are engaged at work. That’s why it’s no surprise the average worker spends only four years at a job (the figure is even lower for millennials).

Bottom line: Retaining talent and keeping employees engaged is an uphill climb in today’s work environment.

While businesses have traditionally thrown plenty of resources toward market research and customer surveys to evaluate brand loyalty, measuring brand perception within the organization hasn’t received the same attention. But what if companies used similar metrics to evaluate employee engagement as they do for customer loyalty? It could provide key data for managers to understand and better engage their workforce.

Let’s look at how engagement and data intersect, and a core metric you should be using to assess employee satisfaction.

Why Employee Engagement Is Important

Before you start digging into data, you need to be completely sold on boosting employee engagement.

Why does it matter? Well, employee retention is closely tied to employee engagement. If your employees are actively involved in work, enthusiastic, and have opportunities to develop, chances are they’ll want to stay with the company.

Disengaged workers end up costing your company more in the long run.

But beyond retention, employee engagement impacts a company’s business outcomes, such as productivity, profitability, and customer loyalty. Disengaged workers end up costing your company more in the long run through employee turnover expenses.

According to Gallup, millennial turnover rates alone cost the U.S. economy $30.5 billion annually. So improving employee engagement makes business sense.

Why HR Is Becoming More Data-Driven

As more data and tools for analyzing it become available to help businesses, it only makes sense that human resources professionals take advantage of these tools. Companies are starting to realize how important HR decisions are to their bottom line. A Harvard Business Review study revealed that firms that used analytics to manage their workforces improved profits by as much as 65 percent.

Data can give you insights into trends and factors that traditional evaluation methods may miss. It can help you better understand attrition and measure the level of employee engagement. It also gives you concrete evidence on the effectiveness of initiatives.

What is a Net Promoter Score?

So how can you measure employee engagement? Well, one way is using the same tool businesses use to measure customer loyalty. For nearly 15 years, top companies have used Net Promoter Score (NPS) to measure customer experience and predict business growth.

NPS evaluates customer responses to one simple question: On a scale of 0-10, how likely is it that you would recommend our brand to a friend or colleague?

Respondents are divided into three groups:

  • Promoters (scores 9-10): Customers who refer your brand to others and help fuel growth
  • Passives (scores 7-8): Customers who are satisfied, but are vulnerable to your competitors
  • Detractors (score 0-6): Unhappy customers who can impede your growth

The NPS is derived from the responses and used as the basis for understanding customer experience.

Why Calculate eNPS?

Because businesses have found NPS to be an effective tool for measuring customer loyalty, it makes sense to apply the same concept internally to evaluate employee engagement.

Instead of asking customers if they are likely to recommend your business to friends, ask employees how likely are they to recommend the company as a place to work to determine your company’s employee NPS (eNPS).

eNPS serves as the starting point to understanding employee loyalty.

Though it’s not a comprehensive employee engagement metric, eNPS serves as the starting point to understanding employee loyalty. Once you know your company’s eNPS, you can dig deeper into the data and find out why the score is high or low. Your polling tools may also allow you to drill into the anonymous data by team, to identify managers that need extra training, for example (before their team starts jumping ship).

How to Calculate eNPS

To calculate your eNPS, simply divide the responses into the three groups: promoters (9-10), passives (7-8), and detractors (0-6). Calculate the percentages of detractors and promoters (ignore the passives because they are considered neutral).

Then subtract the percentage of detractors from the percentage of promoters. The result is your company’s eNPS.

For example, in a company of 10,000 employees, perhaps 1,000 rated the company a 9 or 10, and 3,000 rated the company a 0 to 6 — so 10 percent are promoters and 30 percent are detractors. The result of this example would be a -20 percent eNPS score — a sign of concern!

What is a Good eNPS?

An eNPS can range from -100 to 100. Anything above zero is acceptable, though companies have varying standards. In general, a score of 10-30 is considered good, and a score of 50 is excellent.

Regardless of the number, you should look beyond the data to understand why employees are satisfied or dissatisfied and combine your eNPS with other evaluation metrics. It’s also good to survey employees regularly to measure any change in your eNPS. Directly following a major change in company strategy or leadership is a great time to check the pulse of the organization.

Data is vital to assessing employee engagement. Using the eNPS as the core of your engagement evaluation gives you a solid basis for understanding employee loyalty, and can help you strategically improve your retention rate.